Taiwan's Farglory Group will develop an estimated $1 billion hotel and residential project in Abu Dhabi's new financial district in partnership with the emirate's state fund, a source close to the situation said on Wednesday.   

The project, which includes high-end residences, office buildings, luxury hotels and shopping malls, is slated to break ground in the third quarter of next year, with completion due in 2016, said the source.   

The project will form part of the Sowwah Square development, which will be the future home of the Abu Dhabi stock exchange and which the emirate is building up as a financial centre, backed by state investment fund Mubadala.   

'They want the project to become the future Manhattan of the Middle East,' said the source, asking for anonymity due to the sensitive nature of the matter.  

Farglory and the fund are set to announce the tie-up on Thursday.   

Abu Dhabi, the United Arab Emirates' capital, is investing heavily in sectors such as real estate, industry, tourism and infrastructure to diversify its economy from oil. Work on Sowwah Square began in 2007.   

Farglory, a major property developer with heavy exposure in the capital Taipei, is trying to expand overseas, including in China, whose trade ties with Taiwan are at their best in almost 60 years.   

Shares of Farglory's construction arm ended down 2.7 percent on Wednesday, while the broader market slipped 0.6 percent.

Mubadala, fully owned by the Abu Dhabi government, had assets totalling 86 billion dirhams ($23.4 billion) as of the end of June. -Reuters